Lower interest rates have motivated you to refinance your home loan. The lower rate may save you a tremendous amount of money over the life of the loan, but you should also expect to pay the lender the typical closing costs associated with any new loan, including service fees, points, title insurance protection and other expenses.

Why do I need to purchase a new title insurance policy on a refinanced loan?

To the lender, a refinance loan is no different than any other home loan. So, your lender will want to insure that their new loan is protected by title insurance, just as the original lender required. Therefore, when you refinance you are buying a title policy to protect your lender.

Why does a Lender need title insurance?

Most lenders generate loans and then immediately sell those loans to secondary market investors, such as FannieMae.

FannieMae, in order to protect its security interest in the loan, requires title insurance coverage. Even those lenders who keep original loans in their portfolio are wise to get a lenders policy to protect their investment against title related defects.

When I purchased my home, didn’t I also buy a lender’s policy?

Perhaps. Who pays for the lender’s policy on a purchase loan varies regionally and by the terms of individual contracts.

However, even if you did buy a lender’s policy when you purchased your home, the lender’s policy remains in force only during the life of the loan that was insured. If you refinance, the old loan is paid off (the “life” of the loan expires) and a new loan is issued for which the lender will require a new title insurance policy.

What about my original title insurance policy?

When you bought your home, you purchased a Homeowners title policy. The Homeowners’ policy stays in force as long as you or your heirs own the home. When you refinance, your lender will often require that you purchase a new lender’s policy to protect their new security interest in the property. Thus, you are buying a policy to protect your lender, not a new Homeowner’s policy.

What could possibly have happened since I purchased my home which warrants a new lender’s policy?

Since the time that the original loan was made, you may have taken out a second trust deed on the house or had mechanic’s liens, child support liens or legal judgments recorded against you - events that could result in serious financial losses to an unprotected lender. Regardless if it has been only 6 months or less since you purchased or refinanced your home, a myriad of title defects could have occurred. While you may not have any title defects, many Homeowners do. The only way for a lender to adequately protect itself is to get a new lender’s policy each time you purchase or refinance your home.

Are there any discounts available for title insurance on a refinance transaction?

Yes. Title companies offer a refinance transaction discount or a short-term rate. Discounts may also be available if you use the same lender for your refinance loan and your original loan. Be sure to ask your title company how they can save you money.

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Testimonials

James is a top notch seller, he handled the sale of both of my properties perfectly!!! I strongly recommend you check out White Bear Lake Realty for great service and a caring agent!!Chris B

James was great, he adapted to our style of house hunting with very little effort. We didn't need much help searching for a house but when it came to the negotiating and navigating the red tape he was there for us. His photos of our house were well done and, in my opinion, helped sell our house as fast as it did. We were pleasantly surprised when it sold in 4 days. It did put us on the hot seat for finding a new house but it all worked out in the end.alaskanspawn

We were moving to Florida. Had to sell our house fast and at the right price. Thanks to James at WBL REalty we got that done in time to make a smooth transition.David Engstrom

I found that James did most all the work for us, not just listening but hearing what it was we were looking for, working into our busy schedule instead of us trying to work into his. Financing was a breeze with Perl Mortage. Thanks, James, we love our house!Laurie Tatreau

James is knowledgeable, approachable, personable, organized and patient. My home was ready to sell sooner than he expected and he made time on a very busy Friday to take photos and get it listed. He answered every one of my many questions and explained every part of the process. James is amazing.Dawn

James has many years of experience and it shows when you work with him? He cares about his clients and wants what is best for them!Lisa